Gentiva third quarter total net revenues increase 38% to $387.8 million

Gentiva Health Services, Inc. (Nasdaq: GTIV), a leading provider of home health and hospice services, today reported third quarter 2010 results.

Gentiva acquired Odyssey HealthCare, Inc., one of the largest providers of hospice care in the United States, on August 17, 2010. The Company's continuing operations for the three and nine months ended October 3, 2010 included Odyssey's financial results from its acquisition date. Discontinued operations represent results of Gentiva's respiratory therapy and home medical equipment and infusion therapy businesses which were sold on February 1, 2010.  

Third quarter 2010 highlights include:  

• Total net revenues of $387.8 million, an increase of 38% compared to $281.2 million for the quarter ended September 27, 2009. Net revenues for the 2010 third quarter included home health episodic revenues of $227.4 million, up 8% from $210.6 million in the comparable 2009 period, and hospice revenues of $115.7 million compared to $18.7 million in the 2009 third quarter.  Hospice revenues in the 2010 third quarter reflected 15% revenue growth from Gentiva's existing hospice business as well as $94.2 million in revenues from the Odyssey acquisition.  
• Income from continuing operations of $8.9 million, or $0.29 per diluted share which included pre-tax restructuring, acquisition and integration costs of $22.8 million or $0.44 per diluted share. Income from continuing operations in the third quarter of 2009 was $15.2 million or $0.51 per diluted share and included pre-tax restructuring and merger and acquisition costs of $0.9 million or $0.02 per diluted share.
• Adjusted income from continuing operations of $22.2 million, up 41% compared with the prior year period. On a diluted per share basis, adjusted income from continuing operations was $0.73 in the 2010 third quarter compared with $0.53 in the corresponding period of 2009.  Adjusted income from continuing operations excluded the charges described above.
• Adjusted earnings before interest, taxes, depreciation and amortization attributable to continuing operations (Adjusted EBITDA) increased 80% to $54.9 million in the third quarter of 2010 as compared to $30.4 million in the third quarter of 2009.  Third quarter 2010 Adjusted EBITDA reflected an increase of 23% as compared to the prior year period from Gentiva's ongoing businesses as well as $17.5 million in Adjusted EBITDA attributable to Odyssey. Adjusted EBITDA as a percentage of net revenues improved to 14.1% in the third quarter of 2010 versus 10.8% in the prior-year period. Adjusted EBITDA excluded charges relating to restructuring, acquisition and integration activities.

"During the third quarter, we closed a transformational acquisition with Odyssey, made great progress in the integration of this transaction and posted strong operating results," said Gentiva CEO Tony Strange. "We are well on our way to creating the leading provider of home health and hospice services in America."

Highlights for the nine months ended October 3, 2010 include:  

• Total net revenues of $982.1 million, an increase of approximately 17% compared to $842.4 million for the prior year period. Net revenues included home health episodic revenues of $684.6 million, up 9% from $626.2 million in the comparable 2009 period, and hospice revenues of $156.3 million, up approximately 187% from $54.5 million in the prior year period. Hospice revenues in the 2010 nine month period reflected 14% revenue growth from Gentiva's existing hospice business as well as $94.2 million in revenues from the Odyssey acquisition.
• Income from continuing operations of $39.4 million, or $1.29 per diluted share, which included  net pre-tax charges of $40.7 million or $0.82 per diluted share relating to the impact of settlements of two  legal matters and charges associated with restructuring, acquisition and integration activities.  Income from continuing operations in the comparable 2009 period was $50.8 million or $1.71 per diluted share which included (i) a net gain of $5.7 million or $0.19 per diluted share resulting from various asset sales and (ii) pre-tax restructuring and merger and acquisition costs of $2.4 million or $0.05 per diluted share.
• Adjusted income from continuing operations of $64.5 million, up 39% compared with the prior year period. On a diluted per share basis, adjusted income from continuing operations was $2.11 compared with $1.57 in the corresponding period of 2009. Adjusted income from continuing operations excluded the net gain on sales and charges described above.
• Adjusted earnings before interest, taxes, depreciation and amortization attributable to continuing operations (Adjusted EBITDA) increased approximately 45% to $135.3 million as compared to $93.4 million in the 2009 period.  Adjusted EBITDA excluded the aforementioned charges.

Results of discontinued operations in the third quarter of 2010 included a net loss of $0.7 million or $0.02 per diluted share as compared to a net income of $0.2 million or $0.01 per diluted share in the third quarter of 2009.  For the first nine months of 2010, discontinued operations reflected a net loss of $2.9 million or $0.10 per diluted share compared to a net loss of $0.3 million or $0.01 per diluted share in the corresponding period of 2009.

For the third quarter of 2010, the Company reported net income attributable to Gentiva shareholders of $8.1 million or $0.27 per diluted share compared to $15.4 million or $0.52 per diluted share in the third quarter of 2009.  For the first nine months of 2010, net income attributable to Gentiva shareholders was $36.3 million or $1.19 per diluted share versus net income of $50.5 million or $1.70 per diluted share for the first nine months of 2009. These results included charges for restructuring, legal settlements and acquisition and integration activities and gains on sales of assets as discussed above as well as the results from discontinued operations.

At October 3, 2010, the Company reported cash and cash equivalents of $81.7 million and outstanding debt of $1.075 billion.  Gentiva borrowed $1.105 billion in connection with the financing of the Odyssey acquisition.  Subsequent to closing the transaction, the Company repaid $30.0 million on its revolving credit facility.

Full-Year 2010 Outlook

Including the impact of the closing of the Odyssey transaction, Gentiva now expects 2010 net revenues to be in range of $1.42 billion to $1.45 billion and adjusted income from continuing operations of $2.75 to $2.80 on a diluted per share basis.  The outlook for adjusted income from continuing operations excludes the costs of restructuring, legal settlements and acquisition and integration activities, the results of discontinued operations and the impact of any future acquisitions.